Many countries have applied tax reductions on gasoline

The reduction of environmental protection tax on gasoline, oil and grease does not violate international commitments on the environment to which Vietnam is a member. Source: Internet

According to the Ministry of Finance, the international experience showed that facing the recent continuous increase in world crude oil prices, to reduce the negative impact of high oil prices on inflation, consumption and people's lives, some countries have implemented solutions to reduce taxes on gasoline.

For example, on November 12, 2021, South Korea temporarily reduced fuel tax by 20% on gasoline, diesel and liquefied petroleum gas (LPG) for six months until the end of April 2022.

In India, from November 4, 2021, the excise tax on gasoline has been reduced by 5 rupees/liter (equivalent to US$0.0671/liter) and 10 rupees/liter (equivalent to US$0.1342/liter) for diesel oil.

Thailand has also reduced the excise tax on diesel from 5.99 baht/liter to 3 baht/liter for a period of three months to the end of May 20, 2022. Poland has reduced the excise tax rate on gasoline for 5 months from December 20, 2021 which reduced value added tax on gas from 23% to 8% from January to March 2022.

In Vietnam, the Ministry of Finance has sent a document to the ministries, sectors and the Vietnam Petroleum Association about the draft resolution of the National Assembly Standing Committee to adjust the environmental protection tax rate for gasoline and grease (except aviation fuel).

In this draft, the Ministry of Finance proposed to reduce environmental protection tax for gasoline, oil and grease as follows:

Gasoline (except ethanol) decreased by VND1,000/liter, from VND4,000/liter to VND3,000/liter.

Diesel, fuel oil, and lubricating oil are reduced by VND500/liter, from VND2,000/liter to VND1,500/liter.

Kerosene decreased by VND500/liter, from VND1,000/liter to VND500/liter.

Grease reduced by VND500/kg, from VND2,000 /kg to VND1,500/kg.

Aviation fuel is kept at the current level which is being reduced by VND1,500/liter following the Resolution No. 13/2021/UBTVQH15 dated December 31, 2021 of the National Assembly Standing Committee.

The environmental protection tax rate for gasoline, oil and grease is expected to apply from the effective date of the Resolution to the end of December 31, 2022.

The Ministry of Finance affirmed that the reduction of the environmental protection tax rate for gasoline is in line with the policy of the Party and State in controlling inflation and stabilizing the macro-economy, and in line with the socio-economic conditions of the country.

The adjustment and reduction of environmental protection tax rates for gasoline, oil and grease are still within the framework of the environmental protection tax rate specified in the Law on Environmental Protection Tax, so the principle is consistent with the level of impact on the environment of taxable goods.

As for environment and international commitments, the Ministry of Finance said that, at present, the State and Government have decided to move the activities of the economy - society to a new normal. All production and business activities of businesses and people are also gradually returning to the normal state as before the pandemic.

Accordingly, in the future, the domestic demand for gasoline, oil and grease is likely to increase compared to the time of the pandemic outbreak (in 2020 and 2021) and may increase equivalent to the time before the pandemic (in 2019). The main reason is due to the needs of the economy when transitioning to a new normal after the Covid-19 pandemic.

In the short term, the increase in petroleum consumption is unlikely to be higher than the time before the pandemic because the socio-economic situation still faces many potential risks. Therefore, the reduction of the environmental protection tax rate on gasoline in 2022 will not affect the objective of the environmental protection tax policy.

At the same time, within the framework of FTAs ​​and multilateral forums with the participation of Vietnam, there are currently no mandatory commitments related to the control of petroleum consumption. The reduction of environmental protection tax on gasoline, oil and grease does not violate international commitments on the environment to which Vietnam is a member, including the Kyoto Protocol on climate change and the United Nations Framework Convention United Nations on Climate Change.